Candy Crush Maker, King, Seeks I.P.O. to Further Its Momentum

Candy Crush attracts 93 million players each day, according to King Digital Entertainment’s government filing.Credit

Updated, 8:50 p.m. | The maker of the white-hot Candy Crush mobile game is hoping to cash in before players get a toothache and move on.

Since it was introduced in April 2012, the puzzle game has captivated the public and held everyone’s attention. Personal bests — you made it to level 202?! — have been shared and compared on social media by fans around the globe.

Whether the company can sustain the same sort of excitement among investors, and find a way to avoid the pitfalls of other fading game makers, remains to be seen.

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King Digital Entertainment, the company behind Candy Crush, is about to find out. On Tuesday, it filed for a widely expected initial public offering of stock, pursuing at least $500 million in financing and a lofty multibillion-dollar valuation.

King revealed that Candy Crush accounts for nearly 80 percent of the company’s revenue, which climbed toward $1.9 billion by the end of 2013 from $164 million in 2012. Players can download the game free and pay for power-ups or help to move to higher levels.

The game shows few signs of cooling, at least not yet — holding the second-highest-grossing spot on Apple’s App Store on Tuesday, behind the strategy game Clash of Clans. The probability of the company’s long-term success hinges largely on its ability to prove to investors that it is capable of producing more than a one-hit wonder.

That challenge could be even tougher than getting a new high score. King, a game development studio with offices in San Francisco, London and Sweden, has been around since 2003 and churned out dozens of games. But none have been anywhere near as successful as Candy Crush, which attracts 93 million players each day, according to the company’s government filing. King’s next-most-popular game, Pet Rescue Saga, attracts 15 million users each day.

Already, there are signs that the company might be leveling off. King’s gross bookings and revenue declined in the fourth quarter of 2013, which it attributed in part to a decline in the Candy Crush business. King also emphasized that it expected its blockbuster hit to contribute less to its overall sales over time.

Candy Crush’s meteoric rise echoes so many mobile franchises and companies that came before it, many of which are now shadows of their former selves. Games like FarmVille, Doodle Jump, Draw Something, Cut the Rope, Words With Friends, Angry Birds, and more recently, Flappy Bird, have delighted users and soared to the tops of game and app charts.

Usually within a few months, though, players move on to something else and the games crash and disappear from the top rankings, bringing down their company’s fortunes along the way. Sustainable success for mobile game makers has largely been elusive, as illustrated by Zynga, which went public in 2011 and has struggled to stay profitable and relevant as interest in its products has dropped off drastically.

But companies keep trying, and there is a reason for that: Seventy to 80 percent of all the revenue generated from mobile applications comes from games, according to Marcos Sanchez, a vice president for communications at App Annie, an apps analytics firm.

“Games is where most of the money is coming from for now,” he said. “Other apps are still learning what they need to do to make money.”

In addition, mobile gaming revenue in the United States is expected to double within the next four years, rising to more than $3.77 billion in 2017 from $1.78 billion in 2013, according to a recent report from eMarketer, a research firm.

But Mr. Sanchez said King may have a better handle on the mobile and web-based gaming market than its competitors. Much of the current success of mobile games depends on the ability to turn the most popular titles into franchises that keep users entertained over long periods of time. Angry Birds, for example, has released subsequent riffs on its original game that include a version of the game set in outer space and in the fictional universe of “Star Wars.”

King regularly adds new levels and features to Candy Crush, which seems to be crucial to keeping the game engaging and interesting to players, he said.

“They understand how to monetize regardless of any fluctuations in downloads,” he said about King. “They have extended their run for a fair amount of time.”

Of course, he said, “the question then becomes, how long can you maintain that?”

In addition, Mr. Sanchez said that King most likely has extensive data and analytics on how people play its game, like when they are compelled to make purchases to advance their play. That, combined with the game’s worldwide popularity, may give the company insight into how to build future games that are as addictive — and lucrative.

Despite the positive signs, though, it is hard to ignore the pallor cast upon the gaming industry by companies like Zygna.

But Brian Blau, an analyst with Gartner, said that even if King could not duplicate its recent success, it may not need to.

“King has a large cash influx, and they can build for the future,” he said. That could mean pouring additional resources into its games, building new ones or acquiring rivals to add to its portfolio. In addition, King is already experimenting with other sources of revenue, like Candy Crush physical goods, including socks and branded candy that can be bought by its fans.

“They have a real opportunity to spin off the success of their one-hit wonder,” he said.

Mark Scott contributed reporting.

A version of this article appears in print on 02/19/2014, on page B1 of the NewYork edition with the headline: App Maker Seeks I.P.O. to Further Momentum.